Journal of Retailing 83 (3, 2007) 325–337

Consumers’ perceptions of the fairness of price-matching refund policies

Monika Kukar-Kinney a,∗ , Lan Xia b,1 , Kent B. Monroe c,d,2
a Robins School of Business, University of Richmond, Richmond, VA 23173, United States
b Bentley College, 175 Forest Street, Waltham, MA 02452, United States
c University of Illinois at Urbana-Champaign, United States
d Robins School of Business, University of Richmond, Richmond, VA 23173, United States

Abstract

This paper examines the antecedents and consequences of perceived price-matching policy fairness. Among the antecedents, we study the
effects of the refund depth if a lower competitive price is identified, the degree that the retail product assortment is available at competing
retailers, and the consumers’ inference as to the retailer’s motive for the price-matching policy. Product assortment uniqueness is identified
as a key driver of fairness perceptions, both directly and indirectly through inferred motive. The three experiments show that consumers’
perceptions of the fairness of a store’s pricing policy influence their price fairness perceptions, consequently influencing their retail shopping
intentions.
© 2007 New York University. Published by Elsevier Inc. All rights reserved.

Keywords: Price-matching policy; Consumer perceptions; Price fairness; Shopping intentions

Introduction
The issue of consumers’ perceptions of price fairness has
received increasing attention from marketing and consumer
researchers (for a review see Xia et al. 2004). Prior research
has focused on consumers’ perceptions of the fairness of
prices or price increases for individual products or product
categories. However, no research to date addresses con-
sumers’ fairness perceptions of store-wide pricing policies,
such as price-matching guarantees, and whether consumers’
perceptions of pricing policy fairness influence their price
fairness perceptions.
Price-matching guarantees3 are retail offers to meet or beat
competitive prices at the time of purchase or within a spec-
∗ Corresponding author. Tel.: +1 804 287 1880; fax: +1 804 289 8878.
E-mail addresses: mkukarki@richmond.edu (M. Kukar-Kinney),
lxia@bentley.edu (L. Xia), kentmonroe@comcast.net (K.B. Monroe).
1 Tel.: +1 781 891 2468; fax: +1 781 788 6456.
2 Tel.: +1 804 269 5519; fax: +1 804 269 7614.
3 The term “price-matching guarantee” is commonly used to generically
refer to both price-matching and price-beating guarantees (Moorthy and
Zhang 2006). For example, Staples advertises its policy as “we 110 percent
price-match guarantee it,” while Sears describes its policy as “Price Matching
Plus Policy”. Thus, in the present research, we use the expression “price-
matching” to refer to both price-matching and price-beating pricing policies.
ified period after the purchase (Moorthy and Zhang 2006).
They are store-level policies and usually apply to identi-
cal items sold at competitive outlets. Due to the frequent
use of price-matching policies by retailers, how consumers
respond to price-matching policies has received a grow-
ing interest from researchers (e.g., Biswas et al. 2002;
Jain and Srivastava 2000; Kukar-Kinney and Grewal 2006;
Kukar-Kinney and Walters 2003; Srivastava and Lurie 2001;
Srivastava and Lurie 2004). This previous research shows
that price-matching policies affect consumers’ store price
and value perceptions, as well as their search and purchase
behaviors. Prior research has shown that consumers may infer
the presence of a price-matching policy to mean the store’s
prices are relatively low if the policy is perceived as enforce-
able (Srivastava and Lurie 2004) or is offered by a high-price
image store (Biswas et al. 2002). Hence, when consumers’
cost of search is high, they are more likely to accept a price-
matching policy to be a signal of low prices and consequently
reduce competitive price search (Srivastava and Lurie 2001).
Also, research has shown that consumers’ perceptions of the
believability and value of the policy are influenced by the
depth and the scope of the guarantee, thereby influencing
consumers’ intentions to patronize the store (Kukar-Kinney
and Walters 2003).

0022-4359/$ – see front matter © 2007 New York University. Published by Elsevier Inc. All rights reserved.
doi:10.1016/j.jretai.2007.03.005
326 M. Kukar-Kinney et al. / Journal of Retailing 83 (3, 2007) 325–337
While previous research offers valuable insights into how
consumers respond to price-matching refund policies, it has
not examined consumers’ perceptions of the fairness of this
policy. Understanding how the perceptions of price-matching
policy fairness are formed is important because of their likely
influence on consumers’ purchase behaviors (Xia et al. 2004).
Previous research has shown that consumers use a store-
level pricing policy to infer the store’s price level and the
relative value offered. Past research has also shown that per-
ceptions of price fairness influence consumers’ perceptions
of value and patronage intentions. However, characteristics
of a price-matching policy and the sponsoring retailer may
influence consumers’ perceptions of the policy fairness, and
consequently, their perceptions of price fairness and behav-
ior towards the retailer. Nevertheless, previous research on
the influence of a price-matching policy has not studied con-
sumers’ perceptions of the fairness of that policy, or its effects
on price fairness perceptions and consumer behavior. Since
a price-matching policy may serve as a signal of a store’s
price level and may also indirectly determine the final price
consumers pay for a product, consumers’ perceptions of the
policy likely will influence their price fairness perceptions.
Thus, a price-matching policy provides an excellent context
to study the joint effects of the fairness of a pricing pro-
cedure (i.e., pricing policy fairness) and a price outcome
(i.e., fairness of the final price paid) on consumers’ shop-
ping intentions, a topic not yet investigated in the marketing
and consumer behavior research to date.
Research contributions
Using three studies, the present research contributes to
research on consumers’ responses to price-matching poli-
cies in several ways. Study 1 examines how retail product
assortment uniqueness influences consumers’ responses to
the presence (versus absence) of a price-matching pol-
icy. Consumers’ perceptions of the fairness of the overall
store pricing policy, individual prices, and the consequent
effects on their shopping intentions are examined in this
first study. Studies 2 and 3 expand the contribution by iden-
tifying (1) perceived price-matching policy fairness as an
important consumer response when a price-matching guar-
antee is present; (2) potential determinants of perceived
price-matching policy fairness (i.e., retail product assortment
uniqueness, refund depth,4 and inferred motive for the pol-
icy); and (3) the influence of perceived price-matching policy
fairness on perceived price outcome fairness and subsequent
effects on customers’ perceptions of value and shopping
intentions.
4 While price-matching refund depth has been examined in a broader
price-matching context in prior research (Kukar-Kinney and Walters 2003),
the present research is the first to identify the motive for the policy and
the retailer’s product assortment uniqueness as determinants of consumer
responses to price-matching guarantees.
Second, we contribute to price fairness theory by propos-
ing and empirically establishing a link between pricing policy
(i.e., pricing procedure) fairness and price outcome fairness.
Studies 2 and 3 demonstrate that perceived pricing policy
fairness influences price fairness perceptions irregardless of
whether the pricing policy influences the final price paid.
Thus, we integrate the existing price-matching and price fair-
ness research domains.
Third, we empirically establish the role of perceived value
as a partial mediator of the effects of price outcome fairness
on purchase intentions. Existing research has found either a
direct effect of price fairness perceptions on purchase inten-
tions (Campbell 1999) or an indirect effect through perceived
value (Martins 1995). We show that price fairness perceptions
influence purchase intentions both directly and indirectly
through perceived value.
The concept of price fairness
Price fairness refers to consumers’ assessments of whether
a seller’s price is reasonable, acceptable or justifiable (Xia
et al. 2004). Fairness judgments can be separated into two
parts, that is, the outcome and the procedure leading to the
outcome. The principle of distributive justice, or fairness of
outcomes, maintains that individuals judge the fairness of a
relationship based upon the allocation of rewards resulting
from their relative contributions to the relationship (Adams
1965). Thus, equal ratios of profits to investments between
all parties involved in an exchange relationship result in
perceived fairness and unequal ratios create perceptions of
unfairness.
Procedural justice, on the other hand, concerns judgments
of whether the processes or procedures are based on pre-
vailing norms and behaviors (Thibaut and Walker 1975).
Distributive and procedural fairness do not always function
independently. In many situations people make a fairness
judgment when they know the distribution of the outcome
as well as the procedure that leads to the outcome. When
people receive process information before outcome informa-
tion, they are more apt to be influenced by the fair process
effect (the tendency for evaluations of outcomes and subse-
quent behaviors to be influenced by perceptions of procedural
fairness). One explanation for this effect is that procedural
information is used in a heuristic manner, that is, as a sig-
nal that the fairness of an outcome would be consistent with
the perceived fairness of the procedure or process leading
to that outcome (Collie et al. 2002). However, when people
receive outcome information before process information they
are affected by the fair outcome effect or fair equity effect
(the positive influence of perceived distributive fairness on
subsequent behavioral responses) (van den Bos et al. 1997).
Various factors including types of cost increases, inferred
motives of the seller, and types of retail stores can be used
to infer the underlying procedure used to determine the final
price. Research has shown these factors do influence fair-
 M. Kukar-Kinney et al. / Journal of Retailing 83 (3, 2007) 325–337
ness perceptions (e.g., Bolton et al. 2003; Kahneman et
al. 1986; Vaidyanathan and Aggarwal 2003). However, no
research has examined the effect of a store-wide pricing
policy, such as a price-matching guarantee, as a pricing pro-
cedure that may influence price fairness perceptions. Buyers
typically receive information on price-matching guarantees
before or at the time of being exposed to the product’s price.
Moreover, the actual final price that buyers will pay for a
product may depend on the specific policy. Thus, a price-
matching policy offers an excellent case to study the joint
effect of perceived pricing policy (i.e., procedure) fairness
and perceived price outcome fairness on consumers’ shop-
ping intentions. Price outcome fairness refers to consumers’
perceptions of the fairness of the final price they will pay for a
product.
Conceptual model and hypotheses
How are consumers’ perceptions of the fairness of an
overall store pricing policy influenced by the presence of a
price-matching policy? Existing research suggests that con-
sumers interpret the presence of a price-matching policy as a
signal of competitively lower store prices (e.g., Kukar-Kinney
2003; Srivastava and Lurie 2004). Moreover, in the presence
of a policy, consumer price referent standards shift higher,
consequently resulting in consumers evaluating the retailer
more positively than when a price-matching guarantee is not
offered (Lurie and Srivastava 2005). Due to the shift of the ref-
erent standard associated with a presence of a price-matching
policy (Biswas et al. 2002; Lurie and Srivastava 2005), we
propose that the presence of a price-matching policy will
induce consumers to perceive that the store’s overall pricing
policy is fairer than when a price-matching guarantee is not
offered. Hence,
H1. A store’s overall pricing policy will be perceived by
consumers to be fairer when a price-matching policy is
present compared to when there is no price-matching policy.
While the presence of a price-matching guarantee policy
may have a positive effect on policy fairness perceptions,
consumers may use details of the policy or characteristics of
the store to infer whether the policy is a true signal of lower
prices. Retail product assortment uniqueness is the propor-
tion of the retailer’s product assortment that is unique to the
participating retailer (i.e., cannot be found at competitive out-
lets). Assortment uniqueness is an important feature of the
store that determines whether a price-matching policy applies
to a specific product. Although a price-matching guarantee
is a store-level policy, typically it applies only to identical
brands and models found in competitive stores. However,
many retailers carry a unique assortment of products not
eligible for price-matching, such as store brands and other
brands for which the retailer may have an exclusive distri-
bution. For example, manufacturers of national brands often
327
make unique product models for different retailers making it
difficult to find identical product models at competing outlets
(Bergen et al. 1996).
Consequently, if a retailer offers a price-matching guar-
antee that applies only to a limited proportion of the store’s
products (i.e., high product assortment uniqueness), then the
overall store pricing policy may be perceived as less fair than
when the price-matching guarantee applies to a relatively
larger proportion of the store’s assortment. However, if no
price-matching guarantee is offered, then product assortment
uniqueness should not influence consumers’ perceptions of
the fairness of the store’s pricing policy, since no formal
comparison of product models across competing stores is
required. Thus, we propose that an interaction will exist
between the presence of a price-matching policy and prod-
uct assortment uniqueness on consumers’ perceptions of the
fairness of a store’s pricing policy.
H2. Product assortment uniqueness negatively influences
consumers’ perceptions of the fairness of a store’s price-
matching policy only when a price-matching policy is
present, but has no effect when there is no price-matching
policy.
When the store’s procedures and policies are perceived to
be fair, then it is more likely that the outcome (i.e., price)
would be perceived as fair (the fair process effect; Collie et
al. 2002). Hence, the perceived fairness of the store’s overall
pricing policy should positively affect consumer perceptions
of price fairness:
H3. There will be a positive relationship between con-
sumers’ perceived fairness of the store’s pricing policy and
their perceptions of price fairness.
Xia et al. (2004) have proposed that the influence of
price unfairness perceptions on purchase intentions will
be partially mediated by consumers’ perceptions of value.
Perceptions of value are determined by the tradeoff of con-
sumers’ perceptions of gains or benefits associated with the
acquisition of the product or service relative to their percep-
tions of costs associated with acquiring the product or service
(Grewal et al. 1998; Zeithaml 1988). Previous research has
demonstrated that unfairness perceptions have a negative
effect on perceived value (Martins and Monroe 1994; Martins
1995). Therefore,
H4. Perceived value will be positively influenced by per-
ceived price fairness.
Consumer shopping intentions refers to the likelihood of
consumers shopping at the particular retailer for a specific
purchasing task. Prior research indicates that perceptions of
fairness positively influence consumers’ shopping intentions
(Campbell 1999). Moreover, previous research also has estab-
lished that shopping or purchase intentions are influenced
328 M. Kukar-Kinney et al. / Journal of Retailing 83 (3, 2007) 325–337
Fig. 1. Antecedents and consequences of perceived pricing policy fairness.
by perceptions of value (Della Bitta et al. 1981; Grewal et
al. 1998). Since research has also shown that perceptions of
price fairness influence perceptions of value (Martins 1995),
we expect that price fairness perceptions will exert an indi-
rect effect on shopping intentions through perceived value.
In addition, since price fairness pertains to the perceptions
of the actual price consumers will pay for a product at the
retailer, we expect that perceived price fairness will also have
a direct positive effect on consumers’ willingness to shop at
the retailer (see Fig. 1). Therefore,
H5. Consumers’ intentions to shop at the retailer will be
positively influenced by their perceptions of:
(a) price fairness, and
(b) value.
Study 1
A 2 × 2 between-subjects experiment in which price-
matching refund policy (present or absent) and product
assortment uniqueness (high or low) were manipulated was
conducted to test the above hypotheses. The manipulations
were contained within a description of Electronic Connec-
tions, a consumer electronics store. Participants read a store
description with the two manipulated variables embedded in
the description. After reading the scenario, participants were
asked to respond to questions about their perceptions of the
overall store pricing policy fairness. Then, they were given a
task of purchasing a DVD player and were asked to indicate
how likely they would shop at this particular retailer. Further,
participants’ price fairness perceptions and perceived value
of this potential transaction were measured. Finally, the 144
undergraduate student participants (average age 21.3 years,
45 percent males) responded to a set of manipulation checks.
Manipulations
Price-matching policy presence was manipulated in the
scenario by including or excluding a description of the store’s
price-matching policy. When present, the policy stated that
should a consumer find a lower price for an identical product
at any local competitor within 30 days of purchase, Elec-
tronic Connections will match the lower price by refunding
the difference in the prices. Further, in the high product
assortment uniqueness condition, 80 percent of the retailer’s
product assortment was unique to the retailer, whereas in
the low uniqueness condition only 20 percent of the product
assortment was unique to the retailer. The low uniqueness
manipulation was phrased as follows:
Over 80 percent of the product assortment carried by Elec-
tronic Connections consists of well-known, national brands
available at several other local stores, which are covered under
this low price guarantee. Less than 20 percent of the prod-
uct assortment in the store consists of store brands and other
brands which are not available elsewhere in the local market,
and are therefore not covered by the guarantee.
Measures
Both pricing policy fairness and price fairness were mea-
sured with a set of four items: fair, acceptable, unfair, and
satisfactory. We adapted this measure from previous research
(Campbell 1999) and added additional items. Perceived value
was measured with three items, adapted from Grewal et al.
(1998). Shopping intentions were measured using three state-
ments, similar to what has been used in prior research (e.g.,
Dodds et al. 1991; Grewal et al. 1998).
Item reliability was assessed by examining standard-
ized item loadings, which all exceeded .50. All constructs
exhibited sufficient reliability (>.80) as well as discriminant
 M. Kukar-Kinney et al. / Journal of Retailing 83 (3, 2007) 325–337 329

Table 1
Scale items and measurement properties
Study 1 Study 2 Study 3

IR SR IR SR IR SR
Price-matching policy fairness
I believe the low price guarantee offered by this store is:
Fair .88 .84 .96 .90 .90 .89
Acceptable .82 .88 .80
Unfair (r) .71 .79 .84
Satisfactory .62 .73 .74
Price fairness
I think the price I would have to pay if I bought the DVD player from this store would be:
Fair .95 .89 .94 .91 .90 .87
Acceptable .89 .95 .87
Unfair (r) .73 .74 .73
Satisfactory .75 .79 .68
Value
If I bought the DVD player at this store, I feel I would be getting my money’s worth. .83 .89 .95 .91 .92 .91
If I bought the DVD player at this store, I think I would be getting good value for my money. .95 .94 .94
Buying the DVD player at this store would be a worthwhile acquisition because it is reasonably priced. .79 .78 .76
Shopping intentions
I would be willing to shop at (store name). .91 .97 .84 .94 .87 .93
It is very likely that I would shop at . .98 .97 .94
The probability that I would shop at is very high. .97 .94 .91
Inferred motive
I believe the store’s low price guarantee is offered because:
The retailer offers the low-price guarantee to serve its own interests. – – .48 .74 .33 .62
The retailer offers the low-price guarantee to increase profits at the expense of consumers. – – .86 .73
The retailer intends to take advantage of customers by offering the low price guarantee. – – .78 .71
IR: item reliability; SR: scale reliability.

validity, as all inter-construct correlations were significantly
less than one. Further, average extracted variances exceeded
the squared inter-construct correlations for all constructs
(Fornell and Larcker 1981). The factor loadings and con-
struct reliabilities are displayed in Table 1, and construct
inter-correlations in Table 2.
Analysis
The manipulation check for the assortment uniqueness
was: “The percentage of the product assortment in the store
consisting of national brands available elsewhere in the local
area is” (1 = very small, 7 = very large). As intended, the
respondents perceived that the retailer offered a significantly
larger portion of national brands in the low uniqueness condi-
tion than in the high uniqueness condition (t = 10.87, df = 134,
p < .01, Meanlow uniqueness = 5.08, Meanhigh uniqueness = 2.78).
Second, the respondents in the price-matching policy condi-
tion were more likely to indicate that the store offered a low
price guarantee than those in the condition where it was absent
(chi-square = 25.36, df = 1, p < .01). Thus, both manipulations
were successful.
The causal model was assessed using latent variable
structural equation modeling in AMOS. Manipulated vari-
ables were represented in the model as dummy (observed)
variables. The overall fit of the model was significant
(chi-square = 252, df = 112, p < .01). However, additional
goodness-of-fit indices (IFI = .93, TLI = .91, CFI = .93, and
RMSEA = .09) all were at acceptable levels indicating that
the model fits the data well (Bagozzi and Yi 1988). Summary

Table 2
Inter-construct correlations in Study 1
Policy fairness Price fairness Value Shopping Price-matching Uniqueness Policy presence ×
intentions policy presence Uniqueness
Policy fairness 1
Price fairness .69 1
Value .57 .50 1
Shopping intentions .41 .61 .47 1
Price-matching policy presence .09 .20 .02 .30 1
Uniqueness −.35 −.37 −.26 −.37 −.06 1
Policy presence × Uniqueness −.29 −.16 −.22 .03 .56 .56 1
330 M. Kukar-Kinney et al. / Journal of Retailing 83 (3, 2007) 325–337

Table 3
Testing the relationships in the overall pricing policy fairness model (Study 1)
Hypothesis: sign Path from → to Study 1 (N = 144)
Standardized estimate t-value
H1: + Price-matching policy presence → overall pricing policy fairness .33 2.90a
Not hypothesized Uniqueness → overall pricing policy fairness −.15 −1.36b
H2: − Price-matching policy presence × Uniqueness → overall pricing policy fairness −.39 −2.82a
H3: + Policy fairness → price fairness .76 7.88a
H4: + Price fairness → value .57 6.01a
H5a: + Price fairness → shopping intentions .47 4.93a
H5b: + Value → shopping intentions .23 2.59a
Goodness-of-fit statistics
Chi-square (df) 252 (112)
IFI .93
TLI .91
CFI .93
RMSEA .09
a p < .01.
b p < .10.

results for the tested model and the standardized structural
path parameter estimates are presented in Table 3. The spe-
cific results are presented next.
As H1 proposed, the presence of a price-matching pol-
icy positively influenced perceived fairness of overall store
pricing policy (β = .33, t = 2.90, p < .01). Moreover, a signif-
icant interaction between the presence of a price-matching
guarantee and retail product assortment uniqueness existed
(β = −.39, t = −2.82, p < .01). As shown in Fig. 2, con-
sumers’ perceptions of store pricing policy fairness in
the presence of a price-matching guarantee were signifi-
cantly lower in the high as compared with low product
assortment uniqueness condition (Meanlow uniqueness = 5.79,
Meanhigh uniqueness = 4.64, F1,139 = 28.42, p < .01). There was
no significant difference when the guarantee was not
offered (Meanlow uniqueness = 5.19, Meanhigh uniqueness = 4.96,
F1,139 = 1.1, p > .10), supporting H2. Further, a positive rela-
tionship between perceived pricing policy fairness and price
fairness existed (β = .76, t = 7.88, p < .01), as predicted by H3.
The results supported hypothesis H4 that consumer percep-
tions of price fairness would positively influence perceived
value (β = .57, t = 6.01, p < .01). Finally, the prediction that
consumers’ intentions to shop at the store would be positively
influenced by perceived price fairness (H5a) and value (H5b)
was supported, as perceived price fairness (β = .47, t = 4.93,
p < .01) and perceived value (β = .23, t = 2.59, p < .01) both
significantly affected shopping intentions.
Discussion
Study 1 findings suggest that an existence of a price-
matching policy enhances the fairness perceptions of a store’s
overall pricing policy. Moreover, support for the fair process
effect (Collie et al. 2002) was found, as pricing policy fairness
(i.e., procedural fairness) had a strong effect on perceptions of
price fairness (i.e., outcome fairness). Thus, retailers should
consider offering a price-matching policy when they desire to
enhance consumers’ price fairness perceptions, and thereby
increase consumer patronage behavior. However, we also
found that the ability of a price-matching policy to influence

Fig. 2. Interaction effect of price-matching policy presence and product assortment uniqueness on perceived overall pricing policy fairness (Study 1).
 M. Kukar-Kinney et al. / Journal of Retailing 83 (3, 2007) 325–337
perceptions of policy fairness was influenced by a specific
store characteristic (i.e., product assortment uniqueness). The
high unique product assortment condition resulted in lower
judgments of the fairness of the store’s pricing policy than
did the low unique product assortment condition when the
price-matching policy was present.
To further investigate potential drivers of policy fairness
perceptions in the presence of a price-matching refund policy
we conducted two additional studies.
Studies 2 and 3
Motivation
In Studies 2 and 3, we examine an important charac-
teristic of a price-matching policy: refund depth. Refund
depth refers to the relative amount of money that the retailer
offers to refund, should a consumer find a lower competitive
price. Price-matching retailers can offer to match the identi-
fied lower price or beat the lower price by a predetermined
amount. When matching competitors’ price offers consumers
receive the lower competitive price as the retailer promised.
Beating a competitor’s price acts as a gesture that the retailer
will punish itself for not offering the lower price. Refund
depth has been shown to enhance consumers’ perceptions of
value and consequently increase purchase intentions (Kukar-
Kinney and Walters 2003). We examined the impact of refund
depth to determine whether it might mitigate the negative
effect of product assortment uniqueness. Further, the extent
to which consumers use the price-matching policy as a low
price signal may depend on their examination of the char-
acteristics of the policy itself and perceptions of whether the
retailer is sincere in offering a lower price. As such, one infer-
ence during this process that consumers may make pertains
to the retailer’s motive for the policy. Inferring the retailer’s
motive may help consumers decide whether the retailer is
sincere in offering the policy and the lower price. Hence, in
Studies 2 and 3 we examined price-matching refund depth
and inferred motive for the retailer’s price-matching policy
in addition to product assortment uniqueness as determinants
of perceived pricing policy fairness.
Furthermore, Study 1 identified perceived pricing policy
fairness as an important factor influencing price fairness per-
ceptions. In Studies 2 and 3, we extend this conclusion by
investigating whether perceptions of the pricing policy fair-
ness have an effect on price fairness perceptions even when
the price paid for the product is not influenced by the price-
matching policy. Thus, Studies 2 and 3 are placed in a context
wherein the price-matching policy either does or does not
influence the potential final price paid.
Conceptual model
How do consumers judge the fairness of a specific price-
matching policy? We propose that consumers will assess the
331
degree to which the retailer’s assortment is eligible for con-
sumer price-matching and the depth of the refund if a lower
price is found elsewhere. Further, consumers will use the pro-
portion of the retailer’s product assortment that is unique to
infer the retailer’s motive for the policy. The inferred retailer’s
motive will also influence consumers’ perceptions of the fair-
ness of the price-matching policy (see Fig. 1).
Assortment uniqueness
As shown in Study 1, product assortment uniqueness neg-
atively influenced consumer perceptions of the fairness of
the store’s pricing policy in the presence of a price-matching
policy. Consequently, as previously predicted in H2, high
product assortment uniqueness will reduce perceived fairness
of the price-matching policy itself.
Inferred motive
Existing research indicates that a firm’s motive influ-
ences consumers’ fairness perceptions of a price increase
(Campbell 1999; Kahneman et al. 1986). The rationale for
this relationship is based on attribution theory, according
to which attributions that people make for other people’s
(firms’) actions are influenced by the other’s intentions or
their inferred motives (Weiner 1992). Similarly, retailers
have certain motives for offering store-wide pricing policies
such as price-matching guarantees. The consumers’ inferred
motive pertains to the consumers’ inferences of the objec-
tive the retailer seeks to achieve by using a price-matching
guarantee. This motive may be positive (e.g., the retailer
is customer-oriented) or negative (e.g., the retailer wants to
increase its profits at the expense of consumers).
Consumers may infer the store’s motive from the specific
terms of the price-matching policy. One factor likely influ-
encing customers’ inferences about the retailer’s motive for
offering the price-matching policy is the extent that its assort-
ment is unique, that is, not available for purchase at competing
stores. Since price-matching guarantees are store-wide poli-
cies, consumers are more likely to infer a negative motive for
offering the guarantee if the policy applies to a relatively small
portion of the store’s products relative to when the policy
applies to most products in the store. Thus,
H6. If a retailer offers a price-matching guarantee, then the
more its assortment is unique, the less favorable will be the
consumers’ inferences as to the retailer’s motive.
As reported above, it has been found that if consumers
perceive that the enforcement cost of the guarantee (i.e., issu-
ing refunds) would be high for a higher-priced retailer then
consumers may interpret the presence of a price-matching
guarantee as a low price signal (Srivastava and Lurie 2004).
However, while consumers may associate such guarantees
with lower prices, price-matching retailers do not necessarily
claim to offer the lowest prices (Srivastava and Lurie 2004).
332 M. Kukar-Kinney et al. / Journal of Retailing 83 (3, 2007) 325–337
If a retailer does not offer prices lower than its competitors,
but instead uses the price-matching guarantee to signal low
prices, the policy may mislead a segment of consumers. If
consumers believe that the retailer’s motive for offering a
price-matching policy is to signal low prices to obtain addi-
tional sales and profits (a negative motive), the policy might
be perceived as unfair. If so, buyers may conclude that the
prices are higher than implied by the price-matching pol-
icy. At the same time, with an inferred sales-oriented motive,
buyers may perceive the selling price of a product is not nec-
essarily low and is, therefore, unfair. On the other hand, if
consumers perceive that the retailer’s motive is more cus-
tomer focused (a positive motive), such as wanting to reward
consumers who by searching and comparing prices bring
the retailer competitive price information, the policy itself,
and the resulting prices might be perceived as fair. Existing
research has demonstrated that an inferred negative motive
for a price increase leads to lower perceptions of price fairness
(Campbell 1999). Hence, in addition to price-matching pol-
icy fairness, an inferred motive may also influence perceived
price fairness. Therefore,
H7. The more positive the inferred motive for the price-
matching policy, the higher the perceptions of
(a) price-matching policy fairness, and
(b) price fairness.
Refund depth
Refund depth refers to the relative amount of money that
the retailer offers to refund, should a consumer find a lower
competitive price. Consistent with equity theory (Adams
1965), fairness is judged according to the input/output rela-
tionship between the exchange parties. In the price-matching
scenario, if the store’s remedy is to match a lower com-
petitive price, consumers need to expend extra effort and
hassle to return to the store and request the refund (i.e., price
difference) to obtain the same price that could have been
obtained from a lower-priced competitor. Thus, their input
(what they give) may be perceived as higher than the output
(what they receive). However, a refund that is greater than
the price difference rewards consumers for the extra effort it
takes to return to the store to get the refund, and as such, the
exchange relationship between the retailer and the consumer
is restored to a more equitable level. Consequently, a refund
that compensates for the additional costs incurred by the
customer should enhance the restoration of the input/output
relationship between the exchange parties (Adams 1965),
resulting in higher perceptions of pricing policy fair-
ness relative to a refund that equals the price difference.
Hence,
H8. A price-beating policy (i.e., a policy that offers a refund
exceeding the price difference between the price-matching
retailer and the competitive lower price) will be perceived
to be fairer than a price-matching policy (i.e., a policy that
offers a refund that only equals the price difference).
Effects of perceived price-matching policy fairness
Consistent with hypothesis H3, we would expect that there
will be a positive relationship between consumers’ perceived
price-matching policy fairness and their perceptions of price
fairness when the final price paid is influenced by the price-
matching policy. Furthermore, even when the price-matching
policy does not directly influence the final price paid, the
fair process effect implies that perceptions of the fairness or
unfairness of a price-matching policy will still influence price
fairness perceptions. For example, consumers may perceive
that since the price-matching policy is not a true signal for
lower prices, the store’s overall product prices may be rel-
atively high and not fair. Hence, the price-matching policy
unfairness perceptions may carry over to the price fairness
evaluations.
Moreover, perceived value will be influenced positively
by perceived price fairness (H4). Further, consumers’ inten-
tions to shop at the price-matching retailer will be positively
influenced by perceived price fairness (H5a) and perceived
value (H5b).
Research design and procedures
Two studies each employing a 2 (depth of refund) × 2
(degree of product assortment uniqueness) between-subjects
experimental design were conducted to test the proposed
hypotheses. Similar to Study 1, the manipulations were con-
tained within a description of Electronic Connections, a
consumer electronics store that now offered a price-matching
guarantee in all experimental conditions. In each study,
participants first read a scenario where a store-wide price-
matching policy was outlined and then responded to questions
about their perceptions of the fairness of the price-matching
policy. Then, they were given a task of purchasing a DVD
player. The participants were also asked to fill out measures of
shopping intentions, price fairness perceptions, and perceived
value of the potential transaction, and finally, manipulation
checks. In Study 2, 229 undergraduate students, averaging
20.5 years (45 percent males) participated for course credit.
In Study 3, 339 undergraduate students, averaging 20.7 years
(56 percent males) participated for course credit.
Manipulations
Product assortment uniqueness and refund depth were
manipulated in the same way across the two studies. Product
assortment uniqueness at Electronic Connections was manip-
ulated as high (80 percent of the products were unique to
the store) or low (20 percent of the products were unique to
the store), as in Study 1. The two levels of the refund depth
were the store’s price-matching guarantee promising either
to match competitive prices in the low refund condition or
 M. Kukar-Kinney et al. / Journal of Retailing 83 (3, 2007) 325–337 333

Table 4
Inter-Construct Correlations in Studies 2 and 3
Policy fairness Price fairness Inferred motive Value Shopping intentions Refund depth Uniqueness
Policy fairness 1 .50 .35 .42 .41 .07 −.31
Price fairness .56 1 .37 .68 .50 −.06 −.08
Inferred motive .36 .35 1 .21 .22 −.08 −.15
Value .41 .64 .29 1 .53 −.04 −.03
Shopping intentions .42 .60 .34 .54 1 .01 −.11
Refund depth .00 −.01 −.04 .07 .02 1 −.00
Uniqueness −.34 −.12 −.17 −.07 −.05 .00 1
Numbers above diagonal represent Study 2 (national brand) correlations, and numbers below the diagonal represent Study 3 (store brand) correlations.

beat any lower competitive price by 10 percent in the high
refund condition. The only difference was that in Study 2,
participants were asked to buy a national brand DVD player
that was available at many local stores, while in Study 3, par-
ticipants were asked to buy a store brand of the same product
that was unique to the store.
Measures
Perceived price-matching policy fairness, price fairness,
perceived value and shopping intentions were measured with
the same items used in Study 1. A new measure was developed
to measure the inferred retailer’s motive (see Table 1). The
items, item reliabilities and construct reliabilities are shown
in Table 1, and construct inter-correlations are in Table 4.
manipulation check for the product assortment unique-
ness was identical to the one used in Study 1. Univariate
ANOVAs were performed on each manipulation check,
with refund depth and product assortment uniqueness being
the fixed factors. In Study 2, only the refund depth was
a significant predictor of the manipulation check for the
refund depth (F1,225 = 17.43, p < .01, Meanlow refund = 3.49,
Meanhigh refund = 4.26). The respondents also perceived that
the retailer offered a significantly larger portion of national
brands in the low product assortment uniqueness condition
than in the high uniqueness condition (F1,225 = 320, p < .01,
Meanlow uniqueness = 5.25, Meanhigh uniqueness = 2.28). No evi-
dence of confounding crossover effects was observed. For
Study 3, all manipulation and confounding checks were also
successful.

Manipulation and confounding checks Measurement properties of the scales

The manipulation check for the refund depth was the Item reliability was assessed by examining standardized
statement: “The relative size of the refund the store item loadings (see Table 1). Only one item loading (item
promises, should a consumer find a lower price for the 1 for the inferred motive) was not sufficiently high. Since
identical product is” (1 = very small, 7 = very large). The the item-to-total correlation for the item with the low load-

Table 5
Testing the relationships in the price-matching refund policy fairness model (Studies 2 and 3)
Hypothesis: sign Path from → to Study 2 (N = 229) Study 3 (N = 339)

Standardized estimate t-value Standardized estimate t-value

H2: − Uniqueness (U) → policy fairness −.26 −4.15a −.29 −5.44a
H6: − Uniqueness (U) → inferred motive −.15 −1.96b −.15 −2.22b
H7a: + Inferred motive → policy fairness .31 3.86a .28 3.64a
H7b: + Inferred motive → price fairness .22 2.88a .16 2.33b
H8: + Refund depth → policy fairness .09 1.43c .01 .17
H3: + Policy fairness → price fairness .43 6.05a .52 8.21a
H4: + Price fairness → value .68 9.95a .64 10.77a
H5a: + Price fairness → shopping intentions .27 3.21a .45 6.35a
H5b: + Value → shopping intentions .35 4.09a .25 3.81a
Goodness-of-fit statistics
Chi-square (df) 254 (144) 354 (144)
IFI .97 .95
TLI .95 .93
CFI .97 .95
RMSEA .058 .066
a p < .01.
b p < .05.
c p < .10.
334 M. Kukar-Kinney et al. / Journal of Retailing 83 (3, 2007) 325–337
ing exceeded .40 (Study 2), it was kept for further analysis
(Hair et al. 1998). By keeping the item, we were able to con-
sider the measurement error associated with this construct.
All constructs exhibited sufficient discriminant validity since
all inter-construct correlations were significantly lower than
one (Table 4). Also, average extracted variances exceeded the
squared inter-construct correlations for all constructs, as rec-
ommended by Fornell and Larcker (1981), satisfying a more
stringent test of discriminant validity.
Study 2 results
The causal model was assessed using latent variable struc-
tural equation modeling in AMOS. The goodness-of-fit indices
(chi-square = 254, df = 144, p < .01; IFI = .97, TLI = .95, CFI = .97,
RMSEA = .058) all meet the recommended levels and provide evi-
dence that the model fits the data well (Hu and Bentler 1999).
Summary results for the tested models and the standardized struc-
tural path parameter estimates are in Table 5. The model for Study
3 also fit the data well (see Table 5).
Consumers’ perceptions of price-matching policy fairness
Product assortment uniqueness exerted a significant direct neg-
ative effect on perceived price-matching policy fairness (β = −.26,
t = −4.15, p < .01), supporting H2. Moreover, product assortment
uniqueness indirectly affected the perceptions of policy fairness
through inferred motive, as the effect of uniqueness on the inferred
motive was negative (H6; β = −.15, t = −1.96, t < .05) and the effect
of inferred motive on price-matching policy fairness perceptions
was positive (H7a; β = .31, t = 3.86, p < .01). Inferred motive also
positively influenced perceptions of price fairness, supporting H7b
(β = .22, t = 2.88, p < .01). Refund depth had a positive effect on per-
ceptions of price-matching policy fairness (β = .09, t = 1.43, p < .10),
lending support to H8.
Price-matching fairness and its effects
There was a positive link between perceived price-matching
policy fairness and perceived price fairness (H3; β = .43, t = 6.05,
p < .01). When the price-matching policy was perceived as fairer,
the price of a product related to a potential transaction was also per-
ceived as fairer. As predicted in H4, perceived price fairness (β = .68,
t = 9.95, p < .01) positively influenced perceived value. Finally, price
fairness (β = .27, t = 3.21, p < .01) positively influenced shopping
intentions directly as well as indirectly through perceived value
(β = .35, t = 4.09, p < .01). Thus, H5a and H5b were supported.
Study 2 discussion
The primary goal of Study 2 was to examine the
antecedents and consequences of perceived price-matching
policy fairness when the policy was applicable to the cur-
rent purchase. Product assortment uniqueness influenced
consumers’ fairness perceptions in two ways: directly, and
indirectly through inferred motive. Inferred motive mediated
the effect of assortment uniqueness on both price-matching
policy fairness and price fairness. Consistent with previous
research (e.g., Campbell 1999), the more positive consumers’
inferred motive, the more positive were their fairness per-
ceptions. These findings highlight the need for retailers to
consider the extent that their products can be found at compet-
itive retail outlets when establishing a price-matching policy.
A high level of product assortment uniqueness may inadver-
tently damage consumers’ fairness perceptions.
Consistent with prior research indicating that larger
refunds are associated with greater consumer value than
smaller refunds (Kukar-Kinney and Walters 2003) we
found that refund depth enhanced perceived fairness of the
price-matching policy. This finding suggests that the price-
matching retailers may be able to at least partially compensate
for the negative effects of a negative inferred motive or high
assortment uniqueness by promising a refund greater than the
price difference, such as 10 percent off the lowest competitive
price.
One of our key findings pertains to the significant link
between consumers’ perceptions of price-matching policy
fairness and price fairness. This relationship suggests that a
price-matching policy, which may determine the final selling
price, does influence consumers’ price fairness perceptions.
In this study, the final price of the product in the purchase
task depended on the perceived likelihood that consumers
would find a lower competitive price and obtain the refund.
Consequently, perceptions of price-matching policy fairness
enhanced perceptions of the fairness of the store’s prices,
including the price of the product under consideration.
Another important finding is that consumers’ perceptions
of price fairness contributed to their shopping intentions
directly as well as indirectly through perceived value. We
empirically demonstrated this partial mediation effect, which
integrated existing research results showing either a direct or
an indirect effect of price fairness on shopping intentions.
Study 3 results
The goal of Study 3 was to examine further the link between
price-matching policy fairness and price fairness in a context when
the price-matching policy was not directly applicable to the con-
sumers’ purchase. We also further investigated the partial mediation
effect of perceived value observed in Study 2. Recall that Study 2
involved a scenario in which the participants were considering pur-
chasing a national brand product available at several local stores,
and hence, the policy was applicable to the purchase at hand. Study
3 placed the participants in a situation where a purchase of a brand
unique to the store was considered. In such a scenario, since the pol-
icy did not apply to their purchase, buyers would not benefit from
the price-matching policy.
If the link between the pricing policy fairness and price fairness
observed in Study 2 was because a price-matching policy potentially
could change a product’s final selling price, then this link conceiv-
ably would not be significant in Study 3. Nevertheless, we expect
price-matching policy fairness will still influence price fairness per-
ceptions via the fair process effect. For example, consumers may
perceive that since the price-matching policy is not applicable to the
product under consideration, the product’s price will not necessarily
be low, competitively, as the retailer does not have to compete with
other stores on price when offering a store unique product (Gourville
and Moon 2004).
 M. Kukar-Kinney et al. / Journal of Retailing 83 (3, 2007) 325–337
Consumers’ perceptions of price-matching policy fairness
Consistent with Study 2, a significant direct effect of product
assortment uniqueness on price-matching policy fairness percep-
tions existed (H2; β = −.29, t = −5.44, p < .01). The respondents’
perceptions of the fairness of the price-matching policy decreased
as their perceptions of the uniqueness of the retailer’s product
assortment increased. Product assortment uniqueness also nega-
tively influenced the inferred motive for the price-matching offer
(H6; β = −.15, t = −2.22, p < .05), while the inferred motive posi-
tively affected both the perceptions of price-matching policy fairness
(β = .28, t = 3.64, p < .01) and price fairness (β = .16, t = 2.33,
p = .01), supporting H7a and H7b. In contrast with Study 2, the
refund depth did not exert a significant influence on price-matching
policy fairness perceptions (H8; β = .01, t = .17, p > .10).
Price-matching fairness and its effects
Similar to Studies 1 and 2, a significant relationship between
price-matching policy fairness and price fairness occurred (H3;
β = .52, t = 8.21, p < .01). Even when the specific purchase task was
not influenced by the price-matching policy, the perceived fairness of
the policy still influenced price fairness perceptions. Furthermore,
price fairness had a direct positive effect on shopping intentions
(H5a; β = .45, t = 6.35, p < .01), as well as an indirect effect through
perceived value (i.e., a positive effect of price fairness on value, H4,
β = .64, t = 10.77, p < .01, and a positive effect of perceived value on
shopping intentions, H5b, β = .25, t = 3.81, p < .01).
Study 3 discussion
The goal of Study 3 was to assess the extent that the
findings of Study 2 would apply to a store-unique product
purchase scenario. The strong and significant relationship
between price-matching policy fairness and price fairness
suggests that a retailer’s price-matching policy has an impor-
tant effect on consumers’ price fairness perceptions even
when the policy cannot influence the final price that con-
sumers pay. We reasoned that price-matching policy fairness
influenced price fairness through consumers’ perceptions of
overall store price level via the fair process effect. Addition-
ally, the inapplicability of the price-matching policy may have
alerted consumers to the fact that the retailer does not have
to compete with other stores on the price of such a prod-
uct (Gourville and Moon 2004), enhancing the influence of
price-matching policy fairness on price fairness perceptions
in Study 3. Future research should examine the underlying
mechanism of how pricing policy fairness influences price
fairness perceptions in different situations.
Consistent with Study 2, inferred motive was a func-
tion of product assortment uniqueness. In addition, inferred
motive continued to produce an important effect on both
price-matching policy fairness and price fairness percep-
tions.
Finally, unlike Study 2, depth of refund did not have
a significant effect on consumer perceptions of fairness of
price-matching policy. A possible explanation for this find-
ing is that consumers were not affected by the refund depth in
Study 3 because of their inability to use the price-matching
guarantee on their store unique product purchase.
335
Overall, the results of Study 3 were consistent with those
of Study 2. Our findings highlight the potential that price-
matching policies have to influence consumers’ perceptions
and behavior across different purchase situations, not only
when a price-matching policy applies to the purchase, but
also when the store-unique nature of the product purchase
makes the guarantee inapplicable.
Conclusions, limitations and future research
The present research offers theoretical contributions to
consumer research. Our research is the first one to demon-
strate the relationship between pricing policy fairness and
price fairness and their consequent effects on shopping inten-
tions. Three studies confirmed the influence of consumers’
perceptions of pricing policy fairness on price fairness judg-
ments, whether the policy had a direct impact on the final
selling price of a product or not. Perceptions of price-
matching policy fairness influenced consumers’ shopping
intentions indirectly through perceived price fairness, while
perceptions of price fairness influenced consumers’ shopping
intentions directly. In addition, price fairness perceptions
influenced shopping intentions indirectly through perceived
value, consistent with previous research (Martins and Monroe
1994; Xia et al. 2004). Further, we examined factors that
influence consumers’ price-matching policy fairness per-
ceptions, specifically, product assortment uniqueness, the
inferred retailer’s motive and the refund depth, thus contribut-
ing to research on price-matching guarantees.
Our research also has important managerial and pub-
lic policy implications. To the extent that price-matching
guarantees may mislead consumers, they may be unethical
retail practices. Although consumers develop marketplace
knowledge and knowledge of seller persuasion attempts with
age and experience (Friestad and Wright 1994; Obermiller
and Spangenberg 1998; Wright 2002), nevertheless, not all
consumers may be aware of potential deception that may
occur with price-matching policies. For example, consumers
may be unaware of the extent of products eligible for price-
matching or whether an individual product can be found at
competing outlets, and may assume that the policy will apply
to their purchase regardless. Public policy officials need to
consider whether guidelines need to be established to protect
consumers from potentially being deceived.
Our research is the first one to examine the effects of
specific price-matching factors and inferred motive on con-
sumers’ fairness perceptions of the policy. Results show that
consumers inferred a store’s motive for the policy based on
their knowledge of the relative uniqueness of the retailer’s
product assortment. Inferred motive was a key factor in
determining pricing policy fairness perceptions, as even the
influence of factors such as product assortment uniqueness
was at least partially mediated through inferred motive. Our
findings also indicate that price-matching refund depth can
increase price-matching policy fairness perceptions in the sit-
336 M. Kukar-Kinney et al. / Journal of Retailing 83 (3, 2007) 325–337
uation when the consumer is buying from the portion of the
product assortment that can be found at competitive outlets,
but not when a store-unique product purchase is considered.
Presumably, consumers perceive that the benefit of a higher
refund depth could be potentially realized when the product
can be found at a competitive outlet. Since price-matching
guarantees have become a widespread retail practice, man-
agers need to know how these policies affect consumers’
perceptions and behaviors.
The scenarios used in the studies were focused on
consumers’ pre-purchase evaluations, in which consumers
purchase decisions were based on their perceptions and
estimates. However, a price-matching policy involves both
pre-purchase as well as post-purchase activities. When con-
sumers make a purchase under the policy and later find a
lower price at another store, they may or may not get the
refund. For example, they may find the lower price after
the price-matching period expires. The product model with
the lower price may be slightly different. Or, they may
have been refused the refund, while other customers in the
same situation received the refund. These factors may induce
consumers to modify their perceptions of price-matching pol-
icy fairness and price fairness, and consequently influence
their post-purchase behaviors such as complaints, word-
of-mouth communications, and future purchase intentions.
Future research should examine these post-purchase behav-
iors as well as the process by which consumers update their
price-matching policy and price fairness perceptions.
To manipulate product assortment uniqueness, the present
research uses fixed and relatively extreme proportions of
20 percent versus 80 percent of products available either
from the price-matching store only versus also from compet-
itive stores. Future research should use a variety of different
proportions, including less extreme ones, to estimate how
consumer response varies across several levels of product
assortment uniqueness.
A final limitation pertains to the student samples used
in the present study. As with any single sample study, the
results need to be replicated to determine their generalizabil-
ity. Since consumer interpretation of marketing claims such
as price-matching offers may change with age and experience
(Friestad and Wright 1994), future research should test the
relationships discovered in this research using respondents
with different levels of marketplace experiences to determine
the generalizability of the present research.
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